State Auditor Report Raps Medi-Cal Enrollment System

The division of the California Department of Health Care Services responsible for enrolling and tracking Medi-Cal providers was criticized this month in a report by the Bureau of State Audits.

In an 18-page report to the governor and legislative leaders, state auditor Elaine Howle said the Provider Enrollment Division of DHCS had followed through on only half of the dozen recommendations her office made in April 2007 to improve the division’s efficiency.

“While the department implemented six of our recommendations, it could not demonstrate it implemented the remaining six,” Howle said in her report.

The report highlights several areas that might delay or sidetrack applications of physicians and other health care professionals to qualify as Medi-Cal providers. Although it deals with bureaucratic minutiae that generally doesn’t make it onto the public radar, the report takes on added significance this year in light of the state’s cuts to Medi-Cal reimbursement rates, a move critics say will thin the ranks of Medi-Cal providers in the state.

The Department of Health Care Services and the state auditor’s office were both asked to comment for this story. Neither responded before deadline.

Audit Requested by Legislature

In 2006, the Joint Legislative Audit Committee asked the state auditor to review the state’s Medi-Cal provider enrollment process, as well as the laws and regulations governing it. Among the specific tasks requested, the auditor asked the department to:

• Compare Medi-Cal and Medicare application and enrollment procedures with the goal of streamlining both processes by eliminating duplication;
• Assess DHCS’ tracking and monitoring of the application process; and
• Identify the number of applications denied over the previous year and the reasons for those denials.

In addition, the auditor asked DHCS to identify the total number of applicants awaiting enrollment as Medi-Cal providers; determine the total number of applications the department did not process within the designated review period; and categorize each group by provider type, specialty, geographic location, Medicare enrollment status and application type.

The auditor’s office issued a report in April 2007 recommending 12 specific steps DHCS should take to improve its enrollment process. DHCS responded with a report earlier this year in which it detailed steps to comply with the recommendations. This month’s report from the auditor basically tells the department it’s halfway there.

The Empty Half of the Glass

In her letter to the governor and legislative leaders, Howle wrote, “Although the department indicated in its responses to our audit that it had implemented our recommendations, in six instances we were not able to gain assurance that our concerns were addressed.”

The auditor’s report said DHCS:

• Did not consistently follow its new policies to ensure the accuracy of its data. “Our accuracy testing revealed several exceptions in the PETS data,” the report said, referring to the department’s Provider Enrollment Tracking System;
• Has not maintained the integrity of PETS by removing all test records from the system;
• Has not demonstrated that it is adequately dealing with a backlog of referrals, some of which are nearly three years old;
• Has also not demonstrated it promptly notifies applicants when it automatically enrolls them as provisional providers;
• Performed only limited reenrollment activity since the 2007 report; and
• Cannot demonstrate that it monitored Medicare’s revalidation process with an eye toward streamlining the Medi-Cal and Medicare application processes.

The Full Half of The Glass

The report specified six areas in which DHCS followed through on the auditor’s recommendations:

• Supported legislation to extend the problem resolution period in the application process from 35 days to 60 days;
• Increased efforts to inform applicants that they must use current and appropriate forms to complete applications;
• Increased its efforts to notify preferred provider applicants of the reasons why it might deny an application;
• Met regularly to review and update its list of high-risk fraud indicators;
• Aligned criteria in its Provider Enrollment Tracking System with the department’s list of high-risk fraud indicators; and
• Established and followed through with procedures to track denied applications.

Ball Now in Politicians’ Court

The next step in the bureaucratic process depends on the governor and legislative leaders who have several issues on their collective plate, including a growing budget deficit now estimated to be $15 billion.

Although the auditor does not specify a number, the recommendations she makes are aimed at saving the state money as well as improving the process for bringing physicians into the Medi-Cal program, both goals high on many legislators’ lists.

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